The timber business can be a highly profitable one. But along with in-depth knowledge and experience in the industry, it also takes a lot of working capital.
The majority of businesses – including those in the timber industry – may come across a hiccup or two that reduces working capital. In these cases, getting a loan is essential to help cover ongoing expenses.
Why a Loan for Timber & Lumber Business is Often Needed?
The loan search and approval process can often be a frustrating experience. Traditional lenders that offer small business loans typically enforce a long, drawn-out and difficult application process that can take weeks or months.
Many times, this waiting game ends up in a rejected application. In the meantime, your timber business could be without the equipment and logging transport vehicles that you require, which will do nothing but make your business suffer.
Luckily, there is an increasing number of options when it comes to business loans for timber business. Many times bad credit isn’t shunned upon, and little or no collateral is needed.
Non-bank lenders also have a much more streamlined application and approval process and can fund your account with the loaned money in as little as 48 hours.
With such fast access to cash, you could be buying the equipment you need right away without having to experience any delays.
Typical Timber Business Costs That Require Financing
There are a host of expenses that timber business owners can face from time to time:
Logging equipment expenses
Transporting vehicle costs
Forestry association fees
Timber facility mortgage costs
Computer system fees
What Are Your Timber Business’s Financing Options?
Timber business owners have a number of options to choose from other than loans assigned by traditional commercial banks. Here are a few financing solutions to help with your working capital needs:
Short Term Loans
A short-term loan is much like a typical term loan in that you are granted a certain amount of money up front. You’re then obligated to repay the loan to the lender, in addition to the lender’s fees. You can use a short-term loan to fund any number of business needs, such as buying equipment, covering payroll, and funding facility expansion efforts.
The repayment term is usually much shorter than a typical term loan, and the amount loaned out is much smaller as well. In addition, payments are usually made daily, rather than monthly. Since the repayment period is very short (usually no more than 9 months), the debt doesn’t sit on your records for very long.
Business Cash Advance
Not a loan per se, a business cash advance provides your business with the funds needed to keep working capital flowing. With this financing arrangement, you’re given a certain amount of money to put towards various business expenses, and in turn you permit the lender to take a set percentage of your daily credit card sales.
With this setup, your payments will always fluctuate and will reflect your daily sales volume. As a result, you’re never drained from your working capital, as you’ll never have to make a payment that’s more than what you were able to bring in each day.
You don’t need to have good credit, and there are no restrictions on how you use your business cash advance.
Business Line of Credit
Much like a credit card, a business line of credit allows you to access a certain amount of credit any time you need it. You take out as much or as little from the account whenever the need arises. Once the money is put back in the account, you are free to withdraw from the account again and again, as long as the credit limit isn’t exceeded.
Interest is only charged on the amount withdrawn, so you won’t have to pay fees on the entire credit amount granted. Your credit score shouldn’t affect your ability to be approved for shorter lines, and the capital is always there when you need it to pay for various timber business purposes.
One of the most common complaints among businesses, including those in the timber industry, is the delay between invoicing a customer or supplier and actually receiving payments. This gap between the invoice date and the incoming funds can put a dent in your operations, especially when working capital is a little short.
With invoice financing, you can bridge this gap by ‘selling’ your invoices to a lender. Upon this sale, the lender advances you the majority of the agreed-upon funds, and retains a small percentage of it in a ‘reserve’ account.
From this account, the lender takes the associated fees. Once the invoice is paid, the remainder of the funds within this reserve is paid back to you. If you don’t have any collateral to put up front, that’s fine, as the invoices themselves serve as collateral for this type of financing option.
Logging Equipment Financing
Having a certain selection of equipment is important for timber businesses. Loaders, pullers, trucks, cutting blades, and other expensive equipment are critical components to this operation. But many times there’s not enough cash readily available to buy such equipment up front. In these scenarios, equipment financing can help.
Much like a typical loan, a certain amount of money is given upfront to cover the cost of acquiring your equipment. You then pay back the lender, along with the associated fees and interest, until the entire loan amount is paid back.
Once the loan is fully paid off, you are considered the rightful owner of the equipment – a much different scenario than simply leasing it.
Applying For Your Timber Business Funding From Alternative Lenders
The application process with alternative lenders is typically a simple one. The application is typically quick, and includes disclosing the following pieces of information:
The amount of money that you require
How long you’ve been in business
Your annual revenue
The purpose for the loan
Your credit score
Depending on your criteria, your application can be approved in as little as 48 hours, with money funded into your account shortly after. At Credibly, we can help you identify the loan options that are better suited for you to solve your working capital needs.
Once you’ve identified the right financing option for your situation, we can support your financing needs. To get started, fill out our online pre-qualification form or contact us directly.